Forget gold. It pays zero income which is why I buy FTSE dividend stocks instead

The price of gold has risen above $1,900 per ounce after a year of doing very little, but I’m in no rush to buy, preferring to build wealth in top UK dividend stocks.

I was never golden. Many investors recommend it as a portfolio diversifier, but I have never seen that point. Yes, I know it’s a value store and stuff. I also know that it is not usually associated with sharing, and it gives comfort in times of trouble.

Dividend stocks are my bag

But no argument convinced me. I bought a gold sprinkling a few years ago, and just got bored of it sitting there, doing nothing. Precious metals have no use, except for decoration. Investor demand depends solely on sentiment, which as we saw last year, is unpredictable. Most importantly from my point of view, gold does not and will not pay income.

It took me a few years to understand the value of dividend income, but since I got the message I have never looked back. I love the cash payments that go into my portfolio, making me richer without having to do anything. They feel more reliable than the random movement of gold prices, which can go down randomly. Once the dividend is paid, it’s mine.

I am at the stage where I am still reinvesting all the dividend income to buy more shares. So as well as getting rich now, I am building wealth for the future. Today, for example, I earned £84.56 from Scottish Oriental Smaller Companies Trust, out of the blue. splendid.

Soon dividends from my new FTSE 100 buy stock Lloyds Banking Group, persimmonand Rio Tinto will start playing in I’m looking forward to it. They will go straight back into my portfolio, to build my stake in that stock. That will pay even more dividends, in a virtuous circle.

By building a portfolio of mostly FTSE 100 dividend aristocrats, I don’t have to worry that the market crashes from time to time. In a weird way, I’ll welcome it. This means that reinvested dividends will get you more shares, at a lower price. Whereas if the price of gold falls and stagnates, there is no such compensation.

FTSE 100 income shares give me growth, too

Dividend stocks give me more satisfaction than any form of capital growth. Persimmon is up 21.38% since I bought it on October 13th. Rio Tinto has risen 19.81% since November 8th.

Another new purchase, Rolls-Royce, no dividend stock at the moment, but I hope it will soon restore its shareholder payouts. The stock price is up 31.01% since the November 1 purchase.

I bought all three because they looked undervalued on several metrics, including the price-to-earnings ratio. It’s early days but so far my strategy has paid off. I can not get out the real value of gold in the same way, because it does not exist.

Many financial advisors recommend investing 5% to 10% of your portfolio in gold. I have no beef with that. I just don’t do it myself.